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Workers and businesses see the benefits of remote working
In 2019, around 5% of full-time work was done from home. The share jumped to more than 60% in April and May 2020, at the start of the Covid-19 pandemic, said Nicholas Bloom, an economist at Stanford University who has studied remote work for two decades.
That equates to nearly 40 years of pre-pandemic growth virtually overnight, according to his research.
The share of remote work has been steadily declining (to around 27% today), but is expected to stabilize around 25%, a fivefold increase from 2019, Bloom said.
“It’s huge,” he said. “It’s almost impossible to find anything in the economy that’s changing at such a speed, which is growing by 500 percent.”
Initially, remote work was seen as a necessary measure to contain the spread of the virus. Advances in technology, such as video conferencing and high-speed Internet, have made this arrangement possible for many workers.
Employees and companies subsequently discovered benefits beyond an immediate health impact, economists said.
Employees most appreciate having a reduced commute, spending less time getting ready for work, and having a flexible schedule that makes it easier to make doctor visits and pick up the kids from school, a said Bloom.
Some workers have shown reluctance to give up these benefits. Companies such as Amazon And Starbucksfor example, recently faced a backlash from employees after announcing stricter return-to-work policies.
Employers benefit from better employee retention and can recruit from a broader pool of candidates, said Julia Pollak, chief economist at ZipRecruiter. They may be saving money on office space, hiring from lower cost parts of the country, or increasing wages at a slower rate due to workers’ perceived value of the work advantage at home, she said.
It is almost impossible to find anything in economics that changes so quickly.
Nicholas Bloom
economist at Stanford University
For example, job seekers surveyed by ZipRecruiter say they’re willing to take a 14% pay cut for working remotely, on average. The figure is higher – at around 20% – for parents with young children.
Twitter recently closed its Seattle offices as a cost-cutting measure and told employees to work from home, a reversal of a anterior position that employees work at least 40 hours per week in the office.
“The benefits for employers are quite substantial,” Pollak said.
The hybrid working model is a “win-win”
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Most companies have moved to a “hybrid” model, with a workweek split between perhaps two days at home and three in the office, economists have said.
This arrangement gave a slight increase in average worker productivity, Bloom said. On the one hand, the average person saves 70 minutes a day on commuting; about 30 minutes of that time saved is spent doing more work, he said.
“Hybrid is pretty much a win-win,” Bloom said.
According to ZipRecruiter, approximately 39% of new hires are in jobs with a hybrid work arrangement, while 18% of new jobs are fully remote. Both shares are up from their pre-pandemic levels (28% and 12%, respectively).
“It’s still an evolving trend, but the movement is more toward an increase in remote working,” Pollak said.
Of course, not all workers have the ability to work remotely. About 37% of jobs in the US can likely be done entirely from home, 2020 study finds study by Jonathan Dingel and Brent Neiman, economists at the University of Chicago.
There are wide variations by profession and geography. For example, jobs in retail, transport, hotels and restaurants are far less likely as those in technology, finance, and professional and business services to offer work-from-home arrangements.
Remote work can endure even in a recession
Not everyone agrees that the benefits of working from home outweigh the costs.
Evidence suggests that employee mentorship, innovation and company culture can suffer if jobs are entirely remote, Bloom said. According to his research, workers cite face-to-face collaboration, socializing, and better work-life balance as the top benefits of working in the office.
Companies that are fully remote often hold in-person gatherings or retreats as a way to build company culture, Bloom said.
Workers enjoyed high bargaining power due to a vibrant labor market characterized by low unemployment and ample job opportunities. If the economy cools and their bargaining power dissipates, it is unclear whether some employers would introduce stricter work-from-home policies, economists said.
On the one hand, employers may see remote work as a useful way to reduce labor costs in the face of the recession, Bunker said. The most likely scenario is on the fringe: maybe three or four days in the office instead of one or two, he said.
The tech sector is a useful indicator, he said. Tech job postings have fallen this year amid the industry’s struggles, but Indeed’s share of job postings offering a remote work benefit has remained consistent, Bunker said.
“It’s been pretty sticky in the face of hiring declines,” he said.